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Why You Should Be Wary of the Bait and Switch Sales Strategy

Mike Periu

President, Proximo International, LLC

Mike is a seasoned executive with experience in finance and management. He is the founder of Proximo, LLC. a leading provider of small business education and training services in both English and Spanish.
Mike Periu is also a leading national voice for individual empowerment through financial education and entrepreneurship. He has been interviewed over 500 times in national and international media, including NBC, Univision and CNN.
Visit Mike on Google+: https://www.google.com/+MikePeriu

Most people are familiar with “bait and switch schemes” where a retailer will advertise a well-known product at a ridiculously low price to lure buyers to the store. Once the eager customer comes running to buy the $25 flat panel television, they learn that the product is “sold out” and the salesperson does everything they can to try and sell them something else at a much higher price.

In the U.S., using bait and switch typically isn’t considered fraud if the retailer is able to sell the customer the advertised product and if they state in the advertisement that quantities are limited. But just because it can be executed legally doesn’t make it right, and it appears that bait and switch schemes are making resurgence with a new target: small business owners like you and me.

The new bait: sales opportunities

As a small business that has won contracts with the federal government, we are listed on a number of databases. We frequently receive e-mail and phone solicitations from companies that offer to help us secure more government contracts. Typically, these services cost from several hundred dollars per year to several thousand dollars per month. The help they provide includes:

Providing lists of expiring government contracts.

Timely access to requests for proposals from different government agencies that match our NAICS codes.

Assistance in successfully completing applications for government purchasing programs like the GSA schedule.

These services can be valuable in securing new business when used correctly, but they aren’t cheap. That’s why I was rather excited when I received an e-mail from one of these companies indicating that they had a client who needed to work with several subcontractors to bid on a large government project and we had been selected as an ideal match. The e-mail further stated that we should call immediately if interested. Not one to miss an opportunity, and believing this was legitimate, I called them.

The e-mail arrived at 10:00 a.m.—I was on the phone with the company by 10:40 a.m.

The switch

The company’s representative asked me to confirm details about the e-mail and my company. She then proceeded to ask me a number of demographic and statistical questions about my company so they could “match us with potential opportunities in their database.”

I told her that before we talked about that, I wanted to know about the specific opportunity mentioned in the e-mail. Silence ensued. Then uncomfortable silence followed. Then I was put on hold.

After several minutes, the representative came back and indicated that she was very sorry, but another company had already been selected for that opportunity and it was no longer available. It seems a lot can happen in 40 minutes. She then started pitching the company’s paid services and how they could send me similar opportunities for several hundred dollars a month. It was classic bait and switch.

Be on the look out

We are all hungry for opportunities to grow our businesses and this experience provides several important lessons. Lesson one: Be very careful with potential offers to join in on a government bids as a subcontractor. Lesson two: Don’t provide any information until you are certain it’s a legitimate opportunity. In my experience, it’s legitimate when a company looking for a subcontractor reaches out to you or you find a list of interested companies bidding for a contract and you reach out to them directly.